Tuesday June 2, 2009 - 10:37:52 GMT
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Reuters - www.reuters.com
FOREX NEWS-Dollar off year's lows but sentiment bearish
* Dollar steadies after previous day's sharp falls
* Euro down 0.3 pct at $1.4120 <EUR=>
* Aussie dented after RBA says scope for further easing
* Euro zone unemployment rate 9.2 pct in April
(Adds quotes, updates prices)
By Tamawa Desai
LONDON, June 2 (Reuters) - The dollar steadied on Tuesday
after hitting its lowest this year versus a basket of currencies
the previous day, but underlying sentiment for the U.S. currency
remained bearish due to a view that the global economy is
Commodity-linked currencies such as the Australian dollar,
which hit an eight-month peak against the U.S. dollar, also
eased, although analysts expect the aussie's uptrend to remain
intact as commodity prices rise.
A rise in risk-taking appetite, prompted by recent sharp
gains in share prices, took a pause as European stocks fell and
U.S. stock futures were also in negative territory.
"The dollar is still on unstable ground, although we are
seeing a degree of profit-taking today," said Lee Hardman,
currency economist at Bank of Tokyo-Mitsubishi UFJ. "Signs of
improvement in the economy as well as improving financial
conditions continue to weigh on the dollar."
By 0930 GMT, the dollar index .DXY was up 0.2 percent at
79.3881 after hitting its lowest since mid-December at 78.586.
The euro was down 0.2 percent at $1.4120 <EUR=>, having
rallied to $1.4246 on trading platform EBS on Monday, its
strongest since late December.
The markets shrugged off data showing euro zone unemployment
rose to 9.2 percent in April, the highest since September 1999.
This was above forecasts of 9.1 percent in April and an actual
rate of 8.9 percent in March. [ID:nL21005033]
The dollar was flat at 96.48 yen <JPY=>, after rising as
high as 96.81 yen the previous day.
Currencies perceived as higher risk dipped from multi-month
highs against the dollar as traders said their recent gains had
been rapid and temporary profit-taking may be in store.
The Australian dollar slipped after the Reserve Bank of
Australia held interest rates at a record low of 3 percent on
Tuesday, but said there was scope to ease further if needed.
The Australian dollar fell 0.2 percent at $0.8077
<AUD=D4> after an eight-month high of $0.8154 on Monday.
Analysts noted the dollar's recent fall has coincided with
money shifting out of U.S. Treasuries and into emerging markets
equities and other assets.
"It is not so much a flight from the dollar as it seems, but
an expressed preference for assets with greater
yield-enhancement potential," said Neil Mellor, currency
strategist at Bank of New York Mellon.
Sterling was down 0.5 percent at $1.6360 <GBP=D4>, off a
seven-month high of $1.6497 on Monday. The pound also lost
ground after news the Abu Dhabi state-owned International
Petroleum Investment Company sold about 3.5 billion pounds of
shares in UK bank Barclays (BARC.L: Quote, Profile, Research, Stock Buzz) [ID:nL2185843].
U.S. data on Monday bolstered a view that the worst of the
global recession may be over. The May ISM index for factory
activity posted its highest reading since September and
construction spending in April saw its biggest increase in eight
Generally upbeat manufacturing reports from the euro zone,
Britain and China added to that optimism.
The market will keep a close eye on policy announcements
from the European Central Bank and the Bank of England on
Thursday. Both are expected to hold interest rates steady, and
the ECB is set to give details of its plan to purchase assets.
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